• The tax year runs from July 1st to June 30th
• Taxes are (should be) paid in November
• Taxes are ALWAYS in advance ADVANCE

Most people want/are required (per the lender depending on Loan to Value ratios) to have their taxes included in their payment. It makes it easier for everyone and you don’t get hit with a nice little bill right before Christmas. At the time of your loan your lender will set up an “Escrow Account” and “Impound” your taxes. In simple terms they are breaking your taxes down into 12 monthly payments and adding that into your mortgage payment every month. Every payment you make they are taking that tax payment and putting it into the escrow account. When your taxes are due they will cut a check to the county for you.

Example:

Annual taxes: $2,400.00 / 12 months = $200/month
Mortgage Payment: $1,200.00/month + Tax Impound ($200/month) = $1,400.00

*The confusing part (for most people) comes when you want to buy or sell a property since taxes are paid in ADVANCE.*

Sellers: Let’s say you sell your home in this coming March of 2008 and your taxes are $2,400 annually. They have already been paid so naturally you would want reimbursed since you will not be living there the entire tax year. Simply put, you would be reimbursed for the months that the buyer would be occupying it. Since you wouldn’t be there for 4 months (March through the end of June) you would get an estimated $800.00 from the person purchasing your home.

Buyers: Let’s say you are the person purchasing the home above. Naturally you don’t want to pay the taxes for someone else to live there (which I’ve had quite a few people think that is what they were doing). Since the Seller has paid the taxes already you would be required to reimburse him/her for the months that you would be occupying the property (this would show up in your settlement charges at closing) which would come to that same $800.00 for the 4 months.

Refinancing: When you change lenders you have to set up an entirely NEW impound account. The number of dollars they would impound at closing will vary depending on the year. Let’s again assume a March 1st closing date. You’ve already been paying your monthly installments since July and have accumulated $1,600 into this escrow account. But because you are refinancing your property your new lender (if you choose to impound the taxes) will require you to pay (through loan proceeds not out of pocket) that same $1,600.00 to set up your escrow account. Then the lender would deduct that $200.00 every month and at it to the account. When July comes around you would have the full $2,400 in the account and your taxes will be paid.

“But Rick, I already paid it once, why do I have to pay it again?”

Well you are/aren’t paying it twice. Yes you will be required to impound that money again but when you close the loan and your current mortgage is paid off your old lender will close out all accounts for you. They will then see that you have an overage in your escrow account and they will refund you that $1,600. Unfortunately that typically takes 4-6 weeks but you do get it back.

Rick Grand
Worldwide Mortgage Inc.
Cell: 541-521-1011
Fax: 541-465-8894

Oregon Mortgages
Oregon Real Estate

Those days are gone now it must make sense so to speak. Stating $10,000 a month for a baby sitter apparently won’t go through anymore. WHAT??? That is just nuts, they have a 730 fico! haha…sorry, i find that portion funny.

Anyways, programs are tougher to qualify for and that includes government programs that have gone through some recent changes. Now people, agents, loan officers…etc need to be a little more savvy with how they approach loans and the real estate world in general.

Oregon has a program that offers down payment assistance. It is known as the Purchase Assistance Loan (PAL) hence the title of the post. I thought it was a fun little knock off version of “Get err done” but hey, what do I know… The PAL program offers Low Income buyers a secondary loan to help with down payment. The loan is a 0% interest loan

• Up to a $10,000 loan for qualifying consumers
• The loan may be used for Closing Costs or a Down Payment
• 0% interest loan that doesn’t require ANY payment but must be paid off if the home is sold, title is transferred or a default happens
• Designed for low income borrowers
• Income guidelines based on County
• Borrower(s) must be first time home buyers and intend to occupy the residence
• At NO time can the property be rented or leased out

With all of the recent changes a $10,000 down payment on a $200,000 loan would equal 5% of the loan so now you are at a 95% Loan To Value and that can make a world of difference in the eyes of a lender. That can effectively lower their interest rate, their mortgage insurance and their overall payment. PLUS the loan is interest free and doesn’t require a repayment unless one of the above mentioned things happens.

For more information about this down payment assistance as well as Income guidelines please email me at the following address Rick@LoansByRickGrand.com

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Note: This is the 2nd case I’ve whitnessed in the last 12 months.

Unfortunately he is divorced and currently in legal battles with his ex wife and it has been draining his money. He is a fantastic father and I really feel bad for his situation. During our conversation he mentions that his ex wife opened up a credit card using his social security number and he’s having trouble getting it shut down.

Well I call him back this morning after I get a chance to pull his credit, naturally, his credit scores have taken a terrible fall and he is unable to secure a loan to consolidate those bills. I went over his report with him and it seems that she has been abusing his credit.

We promptly filed an Identity Theft complaint as well as put a credit freeze on his credit. Unfortunately the damage is done and we can only try to slow the bleeding at this point. I informed him to get the paperwork from the credit union in regards to the credit card that was opened. To sum it up if he hasn’t signed any papers we’ll be consulting his attorney and he’ll file legal actions against his ex wife (on a number of FELONIES at this point) as well as the institutions that have allowed her to use his social to open these accounts.

Accounts that have been opened:

• Credit Card
• Les Schwab Tires
• Dish Network
• Medical Bills

I really feel bad for this person, I suppose even more since he is a friend of the family, but he takes it with a very high chin and I’m impressed. Needless to say this is just ANOTHER reason why you should monitor your credit on a regular basis.

Please stay tuned for my blog about Indenity theft with some information on what to do if you’ve become a victim, how to prevent it, disputing inaccurate information on your credit and more.

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Drop Box Locations:

• Pacific Continental Banks
• First Tech Credit Unions
• Oregon Community Credit Unions
• Umpqua Banks
• Skopil’s Cleaners
• Hi Tech Green Cleaners
• KMTR Newssource 16
• Montessori School
• Springfield High School
• Thurston High School

For more locations please click the link leading to the Coats for Kids website and you can find a location closer to you.

The Tax writing panel in the house approved a bill that would help out some of the consumers that are facing foreclosure. Typically, Forgiven debt is looked at as income and thus to be taxed accordingly but the bill would not require consumers to claim that as income to avoid the taxes to help ease the issue.

Rep. Kevin Brady of Texas claims the change would punish those who had saved to purchase a second home. Rep. Sam Johnson also of Texas called it a “luxury tax on retirement homes.”

The Senate’s version relieves the tax for 3 years while the House’s version changes it to permanent. Currently if you live in your 2nd home for any 2 of the previous 5 years you get a tax relief and under the proposed change it would be tied to the amount of time it was your primary residence.

Really it just sounds like we’re moving the problem from one area to another, obviously the people with 2nd homes won’t be too thrilled about their tax break going down.

Wow these guys were good! I was very impressed and actually disappointed when they left the stage! I had almost forgot why we were there, these guys were really good and very entertaining. I had never heard of them before but I am glad that I have now. I’ll probably try to see them again sometime since they were so much fun.

I did a quick search to find some literature on the matter and what I found was a little alarming from a baby accessory manufacturer. They have had quite a few recalls on their products. I’m not in the manufacturing business so maybe it is a small amount in the big picture but it was still alarming to me.

• December 20, 1999 — 754,000 car seats/carriers recalled
• December 20, 2000 — 25,500 strollers are recalled
• November 21, 2002 — 410,000 toy attachments on baby walkers recalled
• February 1, 2001 — 3,356 tot rider walkers recalled
• February 28, 2001 — 100,000 play yards/cribs recalled

Not exactly the hottest track record! But I guess they are making millions of these products….

Bill H.R. 1852

• Raises FHA loan limit from 87% to 100% of the conforming loan limit in High Cost Areas (Think Boston, LA, San Fran.) which is currently set at $417,000 in high cost areas
• Raises FHA loan limits from 48% to 65% of the conforming loan limit in areas not designated high cost. This would move the limit from $200,160 to $271,050
• Removes limitations on the FHA on the number of Reverse Mortgages it insures, they are currently limited to insuring 275,000 reverse mortgages (they are at that limit)
• Portion that was raising the portfolio limits for Freddie and Fannie was taken out
• Prohibits the FHA from increasing mortgage insurance fees under most circumstances
• Authorizes HUD to offer incentives to borrowers after on time payments for 3 years & 5 years

• Federal Funds Rate comes down to 4.75% from 5.25%
• Prime Rate falls to 7.75% from 8.25% (Think HELOC’s, Construction loans, auto & personal loans and other consumer loans)
• Dow Jones reacted positively to the news move more than 200 points in the positive direction, 10 minutes after the news break.

Obviously the Fed is hoping to boost economic growth by lowering the borrowing costs for consumers and businesses. When people spend money it has a multiplier affect and that is what they are after.

In a brief statement the Fed said “today’s action is intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time.”

I guess we’ll see if this helps stimulate things a bit and helps put them back on track. There main idea is to keep us out of any sort of recession and I think that they will do just fine at keeping that.

Oregon & California Mortgage Broker

Well us Oregonians have a few things to be proud of these days. Not many states have a housing market that is still performing well and people are getting into some financial trouble because of it.

• Oregon ranks 2nd in LOWEST foreclosure rates nationwide
• House values are still appreciating
• In Lane County homes are still selling for 98% of their list price
• Our Ducks are 3-0 and have been decisively beating our opponents!
• The Beavers repeated as Baseball National Champs

Yep, its a good time to be in the Pacific Northwest and more importantly to be a part of Oregon!